Re: Possible tax change could raise bourbon prices

This, is striking too close to home and below the belt.

I doubt this will ever include the whiskey industry just because of the aging issue, but if it ever gets traction it will cause a lot of people, including moi, to become more active....writing Congressmen and Senators, etc.

I'm sure most of them enjoy a bourbon every now and then. After all, bourbon is as American as apple pie, 4th of July, etc.

Re: Possible tax change could raise bourbon prices

Without going into an all-out rant here in the wrong subject thread...to sum it up, Americans are learning the hard, hard way that elections have dire & long-term consequences. The current administration just continues to double and triple-down on making sure it squeezes as much tax out of everyone (the minority who pays taxes anyhow) using every trick known in heaven, hell & earth - and creating new ones daily - in order to extend it's tentacles to achieve the ultimate goal....total tyrannical centralized government control.

Re: Possible tax change could raise bourbon prices

Originally Posted by Old Lamplighter

Without going into an all-out rant here in the wrong subject thread...to sum it up, Americans are learning the hard, hard way that elections have dire & long-term consequences. The current administration just continues to double and triple-down on making sure it squeezes as much tax out of everyone (the minority who pays taxes anyhow) using every trick known in heaven, hell & earth - and creating new ones daily - in order to extend it's tentacles to achieve the ultimate goal....total tyrannical centralized government control.

Enough said...for here and for now.

"Sic Semper Tyrannis"

I actually wonder if we looked back on the past 50 years, if crazy, crack-ridden, bills/laws were created and passed on election years. It would make sense. Politicians trying to position themselves and/or their high paying lobbyists so they get the votes they need.

Heck, look at what Chris Dodd said. He practically blew the lid of corruption.

Re: Possible tax change could raise bourbon prices

At the end it mentioned that Beam is sitting out of the fight, since they do not use this type of accounting.

So did have they done the math and figured something out that the others do not know. Or, if it seems to be dis-advantagous, then why are they using it?

Any ideas?

B

This proposal isn't new and all it relates to is the method of accounting for inventory that companies use for tax purposes. What is proposed is the elimination of the LIFO (Last In First Out) method of accounting for inventory. When this method is used, it is assumed that the cost of the last item of inventory purchased is the cost of what was sold, regardless of the fact that this probably wasn't the case. What this does is it allocates more costs to the inventory that is sold, essentially reducing profits, and thereby reducing the tax bill. IIRC the use of LIFO took off during the early 1980s when inflation rates were much higher in the US.

Eliminating LIFO would require taxpayers to use FIFO (First In First Out) whereby the older (lower) costs of inventory are assigned to what is sold, increasing profit and increasing taxes. The boost to tax revenue will be temporary as the old prices in inventory are used up, and eventually, taxes will even out once that happens.

There has been talk of making this change for years, now. Brown-Forman isn't going to be taken over by some foreign corporation becuase of higher tax bills. And Beam apparently never made the switch because they probably didn't think it was worth it for tax purposes and probably uses FIFO which likely better reflects reality.

Never ask a man if he is from Virginia. If he is, he'll tell you. If he isn't, you don't want to embarass him.

Re: Possible tax change could raise bourbon prices

At the end it mentioned that Beam is sitting out of the fight, since they do not use this type of accounting.

So did have they done the math and figured something out that the others do not know. Or, if it seems to be dis-advantagous, then why are they using it?

Any ideas?

B

The number of loopholes available to Beam because od rheir sheer size is greater than some others. Many corporations have a corporate holding in low tax locations like Ireland. The US corp pays a huge "License Fee" of some type to the Offshore corporation and thus doesn't have to pay the US tax rate on those profits.

Thanks to strategies like this, corporations like Google paid effectively 3% tax in 2010, JP Morgan 3.5% and so on.

So, which loophole is important to which corporation varies, but thanks to so many of rhem being there, you can be certain that they are all paying an effective rate far less than it appears they are paying on the surface.